For many active in the preservation field and specifically related to redevelopment projects, the availability of financial incentives such as the Federal Historic Tax Credits (FHTC) for Commercial Rehabs is critical. For this reason, in the months of discussion in Washington over what would and would not be included in the GOP’s Tax Reform Bill, preservation organizations, professionals, commercial real estate brokers, developers, and the many investing financial institutions were either actively lobbying against or expressing great concern over the possibility of the c.1986 Historic Rehabilitation Tax Credit being eliminated.
The Tax Credit as we know it today dates back to the Tax Reform Act of 1986 under Reagan’s Administration as part of his “pro-growth tax code.” President Reagan, in fact, described the program as “not only a matter of respect for our nation’s beauty and history, but good economic sense.” The Tax Credit program is essentially a financial incentive to encourage historic preservation efforts and the private investment in the public good because it was believed that the marketplace otherwise would not sufficiently spend its private dollars to achieve the public good. The fact that it was being proposed for elimination in the more current Tax Reform Bill had everyone both puzzled and gravely concerned. The only reason to eliminate such an incentive is if the public benefit doesn’t exceed the public cost. The recent tax reform plan was using the argument that “reduced income tax rates would result in economic growth and increased rates of investment,” but with no guarantee that investment would include the rehab of historic properties. Fortunately, for those advocating for the retention for the Historic Tax Credit program, there were 30 years of quantifiable proof that the Historic Tax Credit has increased private investment across the boards and that the public benefit has outweighed the public cost. Since its inception, the program has preserved more than 42,000 historic buildings by leveraging over $130 billion in private investment. A report prepared by the National Park Service summarized the economic impact of the tax credits over the past 31 years and found that nationally it has generated a cumulative total of roughly 2.4 million jobs, $145 billion in gross domestic product, and $107 billion in income. The FHTC is also associated with the creation of about 550,000 housing units, almost 30% (about 155,000 units) of which are affordable to low- and/or moderate‑income families. In terms of return on investment (ROI), since its beginnings $25.2 billion in Federal Historic Tax Credits have leveraged more than $131.8 billion in private investment (a factor of more than 5x) and for those same $25.2 billion in tax credits granted to investors, $29.8 billion in new tax revenues were returned to the Federal Treasury. This ROI of $1.20 returned to the Treasury for every $1 spent dramatically demonstrates that the public benefit is greater than the public cost.
Fortunately due to these facts, common sense prevailed and on December 20, 2017, the Historic Tax Credit survived the most significant rewrite of the tax code in more than 30 years.
https://savingplaces.org/stories/determined-advocacy-preserves-the-historic-tax-credit#.WnNhea6nGpo